Processing of the amyloid precursor protein (APP) is firmly associated with the pathogenesis of Alzheimer's disease (AD). In fact, mutations in APP itself and in two subunits of an enzyme that regulates APP processing, PSEN1 and PSEN2, cause Familial Alzheimer's disease (FAD). New evidence from our laboratory further stress this link between APP processing and dementia. Familial Danish Dementia (FDD), an AD-like neurodegenerative disorders, is due to mutation in the BRI2/ITM2b gene. Interestingly, BRI2 is an inhibitor of APP processing. The mutations causing FDD results in a loss of BRI2 function and increased processing of APP. Analysis of an animal model of FDD genetically congruous to the human disease (called FDDKI, which, like the human cases, carries one wild-type and one mutant Bri2 allele), shows that the FDD mutation in BRI2 causes impairment in synaptic plasticity and severe hippocampal memory deficits. Recovery from these defects is seen in FDDKI/APP haplodeficient mice. In addition inhibition of APP processing rescues the synaptic deficits of FDDKI mice further connecting APP processing and Familial Danish dementia. Preliminary observations suggest that T668 of APP plays a pivotal role in causing memory loss. In addition, insulin promotes dephosphorylation of this T668 residue, suggesting a mechanism by which insulin can alter AD pathology. Notably, a link between insulin resistance, diabetes mellitus and Alzheimer disease (AD) is supported by several data. Patients with AD often have insulin resistance and insulin improves the cognitive status of patient with early AD. Here, we will further characterize the mechanisms by which insulin alters APP processing and modulates synaptic and hippocampal memory deficits. These studies are likely to shed light on the pathogenesis of AD, as well as to explain the mechanisms by which diabetes and insulin have an effect on AD.